Indian exporters face compliance challenges with RoDTEP annual filing

The central government had notified RoDTEP scheme in 2021.

India’s exporters availing the central government’s Remission of Duties and Taxes on Exported Products(RoDTEP) scheme are facing numerous compliance challenges for filing annual returns under the scheme for FY24. In November 2024, the Director General for Foreign Trade(DGFT) had made it mandatory for exporters to file annual returns in order to continue getting benefits of the scheme.

However, two key industry issues arose due to this tweak, Firstly, exporters are facing challenges in providing some of the details that are being sought under the new annual returns. Secondly, the filing was applicable from FY24 and the scheme was notified in November 2024, six months after the closing of the financial year. This has compounded the challenges of exporters since they are now required to obtain retrospective data from their vendors. Exporters are required to file these annual returns by June 30, 2025.

RoDTEP is a scheme aimed at enhancing competitiveness of Indian exports which was launched in 2021. Under the scheme the government provides compensation to exporters for some of the customs and duties paid by the exporters for manufacturing the end product.

“The most pressing challenge exporters face is the preparation of data for the Annual RoDTEP Return (ARR). Since the mandate for filing ARR was introduced post the closure of the financial year, exporters are now tasked with retroactively reconstructing detailed data sets - something that most ERP systems and internal processes were never designed to accommodate.” Said Kulraj Ashpnani, partner, Dhruva Advisors.

“As a result, exporters are grappling with gaps in data, inconsistent formats, and unstructured records, often having to rely on manual estimations, approximations, and assumptions to comply with the filing requirements.” Ashpnani added.

The annual returns seek granular details which are hard to compile, say experts. For instance, the exporters are required to provide tax costs for transport of various goods involved in manufacturing of the end export product. Transportation is usually handled by third party vendors and not exporters directly, meaning they have to reach out to vendors seeking tax costs.

“The exporters generally have hundreds of suppliers supplying goods/ raw materials to them and collecting such information from suppliers is a herculean task. Many suppliers are not even sharing any information as the same may reveal their costing details to the exporter.” Said Gulzar Didwania, partner, Deloitte India. “Further, the rate of VAT varies for each State and the business book the transportation on PAN India basis therefore, while trying to figure out taxes on transportation, the rate would be used on an approximation basis.”

Another information which is proving to be challenging for the exporters is total electricity duty paid with respect to local turnover. In other words, exporters need to inform how much of duties were paid across the manufacturing process towards electricity.  “There is no guidance note on the basis/ rationale that can be used for such allocation. The usage of different allocation rationale would give different results.” Didwania added.

Exporters are requesting the government to simplify the filing process as some of the details cannot be provided. They are also asking for a guidance note explaining how to arrive at each information being sought in the annual return form to ensure no ambiguity in rules.

“Data requirements and reporting formats should be made available before the start of each financial year, so that exporters can proactively record relevant information in real-time. Retroactive compliance is not only burdensome but also prone to inaccuracy.” Ashpnani added.